Office of Public Sector Information
SCHEDULE 36 continued PART 6 continued
36 (1) Sub-paragraph (2) applies where it appears to the Commissioners that—
(a) there has been a change in the ownership of a company, and
(b) in connection with that change a person (“the seller”) may be or become liable to be assessed and charged to corporation tax under section 767A or 767AA of ICTA.
(2) Paragraph 21 (restrictions on giving taxpayer notice where taxpayer has made tax return) does not apply in relation to a taxpayer notice given to the seller.
(3) Section 769 of ICTA applies for the purposes of determining when there has been a change in the ownership of a company.
37 (1) This paragraph applies where a business is carried on by two or more persons in partnership.
(2) If a tax return has been made by any of the partners under section 12AA of TMA 1970 (partnership returns) in respect of a chargeable period—
(a) paragraph 21 (restrictions where taxpayer has made tax return) has effect as if that return had been made by each of the partners in respect of that chargeable period, and
(b) for the purpose of that paragraph, Condition A is met in relation to a partner if a notice of enquiry has been given, and an enquiry has not been completed, in respect of that return or any other return mentioned in paragraph 21(1) or (2) made by the partner in respect of the chargeable period in question.
(3) Where a third party notice is given to any person (other than one of the partners) for the purpose of checking the tax position of more than one of the partners (in their capacity as such), paragraph 2 only requires the notice to state this and give a name in which the partnership is registered for any purpose.
(4) In relation to such a notice—
(a) in paragraphs 3 and 4 (approval etc of notices and copying third party notices to taxpayer), the references to the taxpayer have effect as if they were references to at least one of the partners, and
(b) in paragraph 30(2) (no appeal in relation to taxpayer’s statutory records), the reference to the taxpayer has effect as if it were a reference to each of the partners.
(5) Where a third party notice is given to one of the partners for the purpose of checking the tax position of one or more of the other partners (in their capacity as such), paragraphs 3(1) and 4(1) (approval etc of notices and copying third party notices to taxpayer) do not apply.
(6) Where a notice is given under paragraph 5 to one of the partners for the purpose of checking the tax position of one or more of the other partners whose identities are not known to the officer giving the notice, sub-paragraph (3) of that paragraph (approval of First-tier Tribunal) does not apply.
(7) Where a third party notice or a notice under paragraph 5 is given to one of the partners for the purpose of checking the tax position of one or more of the other partners, that partner may not appeal against a requirement in the notice to produce any document that forms part of that partner’s statutory records.
38 This Schedule (other than Part 8) applies to the Crown, but not to Her Majesty in Her private capacity (within the meaning of the Crown Proceedings Act 1947 (c. 44)).
39 (1) This paragraph applies to a person who—
(a) fails to comply with an information notice, or
(b) deliberately obstructs an officer of Revenue and Customs in the course of an inspection under Part 2 of this Schedule that has been approved by the First-tier Tribunal.
(2) A person to whom this paragraph applies is liable to a penalty of £300.
(3) The reference in this paragraph to a person who fails to comply with an information notice includes a person who conceals, destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of, a document in breach of paragraph 42 or 43.
40 (1) This paragraph applies if the failure or obstruction mentioned in paragraph 39(1) continues after the date on which a penalty is imposed under that paragraph in respect of the failure or obstruction.
(2) The person is liable to a further penalty or penalties not exceeding £60 for each subsequent day on which the failure or obstruction continues.
41 (1) If it appears to the Treasury that there has been a change in the value of money since the last relevant date, they may by regulations substitute for the sums for the time being specified in paragraphs 39(2) and 40(2) such other sums as appear to them to be justified by the change.
(2) In sub-paragraph (1) “relevant date” means—
(a) the date on which this Act is passed, and
(b) each date on which the power conferred by that sub-paragraph has been exercised.
(3) Regulations under this paragraph do not apply to any failure or obstruction which began before the date on which they come into force.
42 (1) A person must not conceal, destroy or otherwise dispose of, or arrange for the concealment, destruction or disposal of, a document that is the subject of an information notice addressed to the person (subject to sub-paragraphs (2) and (3)).
(2) Sub-paragraph (1) does not apply if the person acts after the document has been produced to an officer of Revenue and Customs in accordance with the information notice, unless an officer of Revenue and Customs has notified the person in writing that the document must continue to be available for inspection (and has not withdrawn the notification).
(3) Sub-paragraph (1) does not apply, in a case to which paragraph 8(1) applies, if the person acts after the expiry of the period of 6 months beginning with the day on which a copy of the document was produced in accordance with that paragraph unless, before the expiry of that period, an officer of Revenue and Customs made a request for the original document under paragraph 8(2)(b).
43 (1) A person must not conceal, destroy or otherwise dispose of, or arrange for the concealment, destruction or disposal of, a document if an officer of Revenue and Customs has informed the person that the document is, or is likely, to be the subject of an information notice addressed to that person (subject to sub-paragraph (2)).
(2) Sub-paragraph (1) does not apply if the person acts after—
(a) at least 6 months has expired since the person was, or was last, so informed, or
(b) an information notice has been given to the person requiring the document to be produced.
44 A failure by a person to do anything required to be done within a limited period of time does not give rise to liability to a penalty under paragraph 39 or 40 if the person did it within such further time, if any, as an officer of Revenue and Customs may have allowed.
45 (1) Liability to a penalty under paragraph 39 or 40 does not arise if the person satisfies HMRC or (on appeal) the First-tier Tribunal that there is a reasonable excuse for the failure or the obstruction of an officer of Revenue and Customs.
(2) For the purposes of this paragraph—
(a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person’s control,
(b) where the person relies on any other person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure or obstruction, and
(c) where the person had a reasonable excuse for the failure or obstruction but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied, or the obstruction stops, without unreasonable delay after the excuse ceased.
46 (1) Where a person becomes liable for a penalty under paragraph 39 or 40, HMRC may—
(a) assess the penalty, and
(b) notify the person.
(2) An assessment of a penalty under paragraph 39 or 40 must be made within 12 months of the relevant date.
(3) In sub-paragraph (2) “the relevant date” means—
(a) in a case involving an information notice against which a person may appeal, the later of—
(i) the end of the period in which notice of an appeal against the information notice could have been given, and
(ii) if notice of an appeal against the information notice is given, the date on which the appeal is determined or withdrawn, and
(b) in any other case, the date on which the person became liable to the penalty.
47 A person may appeal to the First-tier Tribunal against any of the following decisions of an officer of Revenue and Customs—
(a) a decision that a penalty is payable by that person under paragraph 39 or 40, or
(b) a decision as to the amount of such a penalty.
48 (1) Notice of an appeal under paragraph 47 must be given—
(a) in writing,
(b) before the end of the period of 30 days beginning with the date on which the notification under paragraph 46 was issued, and
(c) to HMRC.
(2) Notice of an appeal under paragraph 47 must state the grounds of appeal.
(3) On an appeal under paragraph 47(a), the First-tier Tribunal may confirm or cancel the decision.
(4) On an appeal under paragraph 47(b), the First-tier Tribunal may—
(a) confirm the decision, or
(b) substitute for the decision another decision that the officer of Revenue and Customs had power to make.
(5) Subject to this paragraph and paragraph 49, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under this Part of this Schedule as they have effect in relation to an appeal against an assessment to income tax.
49 (1) A penalty under paragraph 39 or 40 must be paid—
(a) before the end of the period of 30 days beginning with the date on which the notification under paragraph 46 was issued, or
(b) if a notice of an appeal against the penalty is given, before the end of the period of 30 days beginning with the date on which the appeal is determined or withdrawn.
(2) A penalty under paragraph 39 or 40 may be enforced as if it were income tax charged in an assessment and due and payable.
50 (1) This paragraph applies where—
(a) a person becomes liable to a penalty under paragraph 39,
(b) the failure or obstruction continues after a penalty is imposed under that paragraph,
(c) an officer of Revenue and Customs has reason to believe that, as a result of the failure or obstruction, the amount of tax that the person has paid, or is likely to pay, is significantly less than it would otherwise have been,
(d) before the end of the period of 12 months beginning with the relevant date (within the meaning of paragraph 46), an officer of Revenue and Customs makes an application to the Upper Tribunal for an additional penalty to be imposed on the person, and
(e) the Upper Tribunal decides that it is appropriate for an additional penalty to be imposed.
(2) The person is liable to a penalty of an amount decided by the Upper Tribunal.
(3) In deciding the amount of the penalty, the Upper Tribunal must have regard to the amount of tax which has not been, or is not likely to be, paid by the person.
(4) Where a person becomes liable to a penalty under this paragraph, HMRC must notify the person.
(5) Any penalty under this paragraph is in addition to the penalty or penalties under paragraph 39 or 40.
(6) In the application of the following provisions, no account shall be taken of a penalty under this paragraph—
(a) section 97A of TMA 1970 (multiple penalties),
(b) paragraph 12(2) of Schedule 24 to FA 2007 (interaction with other penalties), and
(c) paragraph 15(1) of Schedule 41 (interaction with other penalties).
51 (1) A penalty under paragraph 50 must be paid before the end of the period of 30 days beginning with the date on which the notification of the penalty is issued.
(2) A penalty under paragraph 50 may be enforced as if it were income tax charged in an assessment and due and payable.
52 A person is not liable to a penalty under this Schedule in respect of anything in respect of which the person has been convicted of an offence.
53 (1) A person is guilty of an offence (subject to sub-paragraphs (2) and (3)) if—
(a) the person is required to produce a document by an information notice,
(b) the First-tier Tribunal approved the giving of the notice in accordance with paragraph 3 or 5, and
(c) the person conceals, destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of, that document.
(2) Sub-paragraph (1) does not apply if the person acts after the document has been produced to an officer of Revenue and Customs in accordance with the information notice, unless an officer of Revenue and Customs has notified the person in writing that the document must continue to be available for inspection (and has not withdrawn the notification).
(3) Sub-paragraph (1) does not apply, in a case to which paragraph 8(1) applies, if the person acts after the expiry of the period of 6 months beginning with the day on which a copy of the document was so produced unless, before the expiry of that period, an officer of Revenue and Customs made a request for the original document under paragraph 8(2)(b).
54 (1) A person is also guilty of an offence (subject to sub-paragraph (2)) if the person conceals, destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of a document after the person has been informed by an officer of Revenue and Customs in writing that—
(a) the document is, or is likely, to be the subject of an information notice addressed to that person, and
(b) an officer of Revenue and Customs intends to seek the approval of the First-tier Tribunal to the giving of the notice under paragraph 3 or 5 in respect of the document.
(2) A person is not guilty of an offence under this paragraph if the person acts after—
(a) at least 6 months has expired since the person was, or was last, so informed, or
(b) an information notice has been given to the person requiring the document to be produced.
55 A person who is guilty of an offence under this Part of this Schedule is liable—
(a) on summary conviction, to a fine not exceeding the statutory maximum, and
(b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or to a fine, or both.
56 Subject to the provisions of this Schedule, the following provisions of TMA 1970 apply for the purposes of this Schedule as they apply for the purposes of the Taxes Acts—
(a) section 108 (responsibility of company officers),
(b) section 114 (want of form), and
(c) section 115 (delivery and service of documents).
57 (1) Regulations made by the Commissioners or the Treasury under this Schedule are to be made by statutory instrument.
(2) A statutory instrument containing regulations under this Schedule is subject to annulment in pursuance of a resolution of the House of Commons.
58 In this Schedule—
“checking” includes carrying out an investigation or enquiry of any kind,
“the Commissioners” means the Commissioners for Her Majesty’s Revenue and Customs,
“document” includes a part of a document (except where the context otherwise requires),
“enactment” includes subordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30)),
“HMRC” means Her Majesty’s Revenue and Customs,
“premises” includes—
any building or structure,
any land, and
any means of transport,
“the Taxes Acts” means—
TMA 1970,
the Tax Acts, and
TCGA 1992 and all other enactments relating to capital gains tax, and
“taxpayer”, in relation to a taxpayer notice or a third party notice, has the meaning given in paragraph 1(1) or 2(1) (as appropriate).
59 A reference in a provision of this Schedule to an authorised officer of Revenue and Customs is a reference to an officer of Revenue and Customs who is, or is a member of a class of officers who are, authorised by the Commissioners for the purpose of that provision.
60 (1) In this Schedule (subject to regulations under this paragraph), references to carrying on a business include—
(a) the letting of property,
(b) the activities of a charity, and
(c) the activities of a government department, a local authority, a local authority association and any other public authority.
(2) In sub-paragraph (1)—
“charity” means a body of persons or trust established for charitable purposes only,
“local authority” has the meaning given in section 999 of ITA 2007, and
“local authority association” has the meaning given in section 1000 of that Act.
(3) The Commissioners may by regulations provide that for the purposes of this Schedule—
(a) the carrying on of an activity specified in the regulations, or
(b) the carrying on of such an activity (or any activity) by a person specified in the regulations,
is or is not to be treated as the carrying on of a business.
61 In this Schedule “chargeable period” means—
(a) in relation to income tax or capital gains tax, a tax year, and
(b) in relation to corporation tax, an accounting period.
62 (1) For the purposes of this Schedule, information or a document forms part of a person’s statutory records if it is information or a document which the person is required to keep and preserve under or by virtue of—
(a) the Taxes Acts, or
(b) VATA 1994 or any other enactment relating to value added tax charged in accordance with that Act,
subject to the following provisions of this paragraph.
(2) To the extent that any information or document that is required to be kept and preserved under or by virtue of the Taxes Acts—
(a) does not relate to the carrying on of a business, and
(b) is not also required to be kept or preserved under or by virtue of VATA 1994 or any other enactment relating to value added tax,
it only forms part of a person’s statutory records to the extent that the chargeable period or periods to which it relates has or have ended.
(3) Information and documents cease to form part of a person’s statutory records when the period for which they are required to be preserved by the enactments mentioned in sub-paragraph (1) has expired.
63 (1) In this Schedule, except where the context otherwise requires, “tax” means all or any of the following—
(a) income tax,
(b) capital gains tax,
(c) corporation tax,
(d) VAT, and
(e) relevant foreign tax,
and references to “a tax” are to be interpreted accordingly.
(2) In this Schedule “corporation tax” includes any amount assessable or chargeable as if it were corporation tax.
(3) In this Schedule “VAT” means—
(a) value added tax charged in accordance with VATA 1994, and
(b) value added tax charged in accordance with the law of another member State,
and includes any amount that is recoverable under paragraph 5(2) of Schedule 11 to VATA 1994 (amounts shown on invoices as VAT).
(4) In this Schedule “relevant foreign tax” means—
(a) a tax of a member State, other than the United Kingdom, which is covered by the provisions for the exchange of information under the Directive of the Council of the European Communities dated 19 December 1977 No. 77/799/EEC (as amended from time to time), and
(b) any tax or duty which is imposed under the law of a territory in relation to which arrangements having effect by virtue of section 173 of FA 2006 (international tax enforcement arrangements) have been made and which is covered by the arrangements.
64 (1) In this Schedule, except as otherwise provided, “tax position”, in relation to a person, means the person’s position as regards any tax, including the person’s position as regards—
(a) past, present and future liability to pay any tax,
(b) penalties and other amounts that have been paid, or are or may be payable, by or to the person in connection with any tax, and
(c) claims, elections, applications and notices that have been or may be made or given in connection with any tax,
and references to a person’s position as regards a particular tax (however expressed) are to be interpreted accordingly.
(2) References in this Schedule to a person’s tax position include, where appropriate, a reference to the person’s position as regards any deductions or repayments of tax, or of sums representing tax, that the person is required to make—
(a) under PAYE regulations,
(b) under Chapter 3 of Part 3 of FA 2004 or regulations made under that Chapter (construction industry scheme), or
(c) by or under any other provision of the Taxes Acts.
(3) References in this Schedule to the tax position of a person include the tax position of—
(a) a company that has ceased to exist, and
(b) an individual who has died.
(4) References in this Schedule to a person’s tax position are to the person’s tax position at any time or in relation to any period, unless otherwise stated.
65 TMA 1970 is amended as follows.
66 Omit section 19A (power to call for documents for purposes of enquiries).
67 Omit section 20 (power to call for documents of taxpayer and others).
68 (1) Section 20B (restrictions on powers to call for documents under ss20 and 20A) is amended as follows.
(2) In the heading, for “ss 20 and” substitute “section”.
(3) In subsection (1)—
(a) omit “under section 20(1), (3) or (8A), or”,
(b) omit “(or, in the case of section 20(3), to deliver or make available)”,
(c) omit “, or to furnish the particulars in question”, and
(d) omit “section 20(7) or (8A) or, as the case may be,”.
(4) Omit subsections (1A) and (1B).
(5) In subsection (2), omit from the beginning to “taxpayer; and”.
(6) In subsection (3)—
(a) omit “under section 20(1) or (3) or”, and
(b) omit “section 20(3) and (4) and”.
(7) In subsection (4)—
(a) omit “section 20(1) or”, and
(b) omit “, and as an alternative to delivering documents to comply with a notice under section 20(3) or (8A)”.
(8) Omit subsections (5), (6) and (7).
(9) In subsection (8), omit “section 20(3) or (8A) or”.
(10) Omit subsections (9) to (14).
69 (1) Section 20BB (falsification etc. of documents) is amended as follows.
(2) In subsection (1)(a), omit “20 or”.
(3) In subsection (2)(b), omit “or, in a case within section 20(3) or (8A) above, inspected”.
70 (1) Section 20D (interpretation) is amended as follows.
(2) In subsection (2), for “sections 20 and” substitute “section”.
(3) Omit subsection (3).
71 In section 29(6)(c) (assessment where loss of tax discovered), omit “, whether in pursuance of a notice under section 19A of this Act or otherwise”.
72 Omit section 97AA (failure to produce documents under section 19A).
73 In section 98 (penalties), in the Table—
(a) in the first column, omit the entry for section 767C of ICTA, and
(b) in the second column, omit the entry for section 28(2) of F(No.2)A 1992.
74 In section 100(2) (exclusions from provisions relating to determination of penalties under the Taxes Acts), insert at the end “or
(g) Schedule 36 to the Finance Act 2008.”
75 (1) Section 107A (relevant trustees) is amended as follows.
(2) In subsection (2)(a), for “, 95 or 97AA” substitute ‘or 95’.
(3) In subsection (3)(a), omit “or 97AA(1)(b)”.
76 In section 118 (interpretation), in the definition of “tax”, omit “20,”.
77 In Schedule 1A (claims etc. not included in returns), omit paragraphs 6 and 6A (power to call for documents for purposes of enquiries and power to appeal against notice to produce documents).
78 In section 12(3) (secrecy), for the words from “and of section 20(3)” to the end substitute “and of Schedule 36 to the Finance Act 2008 (powers of officers of Revenue and Customs to obtain information and documents and inspect business premises)”.
79 ICTA is amended as follows.
80 In section 767B (change of company ownership: supplementary), in subsection (4), for “, 767AA and 767C” substitute “and 767AA”.
81 Omit section 767C (change in company ownership: information).
82 In section 769 (rules for ascertaining change in ownership of company)—
(a) in subsections (1) and (5), omit “, 767C”, and
(b) in subsections (2A) and (9), for “, 767AA or 767C” substitute “or 767AA”.
83 In section 125 of FA 1990 (information for tax authorities in other member States)—
(a) omit subsections (1) and (2),
(b) in subsection (3), for “the Directive mentioned in subsection (1) above” substitute “the Directive of the Council of the European Communities dated 19 December 1977 No. 77/799/EEC (the “1977 Directive”)”,
(c) in subsection (4), for “such as is mentioned in subsection (1) above” substitute “which is covered by the provisions for the exchange of information under the 1977 Directive”, and
(d) in subsection (6), omit the words from the beginning to “passed,”.
Finance Act 2008